Does RBI monetary policy affects stock market?

When the interest rates come down, the cost of debt also comes down and that brings the cost of equity down. That means that future cash flows are now being valued with a lower discount rate. On the other hand, when the RBI signals higher rates, stock values tend to get impacted negatively.

What time is RBI policy announcement today?

The Reserve Bank of India (RBI) Governor Shaktikanta Das will announce the decision of bi-monthly Monetary Policy Committee (MPC) at 10 am on October 8. “Watch out for the Monetary Policy statement of the RBI Governor @DasShaktikanta at 10:00 am on October 08, 2021,” India’s central bank said on Twitter.

How does monetary policy affect the stock market?

First, there is a direct effect on stock returns by altering the discount rate used by market participants. Tighter monetary policy leads to an increase in the rate at which firms’ future cash flows are capitalised causing stock prices to decline.

How CRR can affect stock prices?

Generally CRR is maintained by RBI to control the liquidity in the market and to control the inflation. If there is any increase is CRR it slows down the growth of the economy. Impact of cash reserve ratio on Indian economy: If interest rates are high due to increase in CRR, all firms may not get money from the banks.

What time is the RBI monetary policy?

“Watch out for the Monetary Policy statement by the RBI Governor @DasShaktikanta at 10:00 am on December 08, 2021,” the central bank wrote on its Twitter handle a day back.

What is the current monetary policy of India?

Interest rates in the banking system are expected to remain steady as the Monetary Policy Committee (MPC) kept the repo rate unchanged at 4 per cent, reverse repo rate at 3.35 per cent, and the marginal standing facility (MSF) rate and bank rate at 4.25 per cent in the bi-monthly monetary policy review.

Do monetary and fiscal policy decisions affect stock market?

Our results show that both fiscal and monetary policies influence the stock market, via either direct or indirect channels. More importantly, we find evidence that the interaction between the two policies is very important in explaining stock market developments.

How does monetary policy affect bond and stock markets liquidity?

During times of expansionary monetary policy, increases in funds of investors can cause more liquidity in both markets (Chordia, Sarkar and Subrahmanyam, 2005, p. 87). They suggest that money flows, i.e., those generated by investments, are a commonality in stock and bond market liquidity.

What is repo rate today?

Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. The current Repo Rate 2021 is at 4\%.